U.S. Buybacks At Record High As Company Earnings Go North

US stock buybacks appear to be hitting new records as companies head into quarterly earnings season, even as some investors worry about the growing threat of inflation, a potential recession, and stagnant share prices, Noel Randewich reported for Reuters.

Photo Insert: JPMorgan Chief Executive Officer (CEO) Jamie Dimon said on Monday, April 4, his bank would reduce its stock buybacks over the next year to meet capital increases required by federal rules.

New repurchase announcements by US companies reached over $300 billion in the first quarter, with March showing a strong year-over-year increase, suggesting buybacks have remained resilient in recent weeks, according to financial data firm EPFR, Informa Financial Intelligence.

Seen as a major contributor to Wall Street's gains in the past several years, stock buybacks will be in the spotlight when results are unveiled. Companies typically buy back their shares when they are feeling confident about the future and view their stock prices as undervalued.

Investors are broadly worried about inflation and the threat of a recession on corporate outlooks, which could sour the willingness of companies to return money to shareholders in the form of big buybacks and dividends.

JPMorgan Chief Executive Officer (CEO) Jamie Dimon said on Monday, April 4, his bank would reduce its stock buybacks over the next year to meet capital increases required by federal rules.

Also on Monday, Starbucks Corp. said it would pause billions of dollars of stock buybacks to invest more in employees and stores at a time when the coffee seller faces growing unionization of its US workforce.

"I don't think these are one-offs. I think you're going to see more companies perhaps slow down their buyback process and be more like they were in early 2020, thinking, 'how much cash do I need on my balance sheet to weather this particular storm if in fact we go into a recession," predicted Art Hogan, chief market strategist at National Securities in New York.

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